EU may require YouTube, DailyMotion to seek deals with music industry

BRUSSELS (Reuters) - Websites such as Google's YouTube, DailyMotion and Pinterest could be required to seek licenses or revenue-sharing deals with artists for content that is uploaded by their users as part of the European Union's planned copyright overhaul.

The music industry has long complained services such as YouTube do not pay artists enough for their music and has urged regulators to close what it calls the "value gap".

They say Alphabet Inc's Google makes a vast amount of money from ad-supported services such as YouTube, but only a small share of it goes to the music industry.

The European Commission, the EU executive, is looking at imposing an obligation on platforms hosting user-uploaded content such as YouTube, Vimeo and DailyMotion to seek agreements with rightsholders "reflecting the economic value of the use made of the protected content", according to a draft paper, seen by Reuters, listing the preferred options for the copyright reform.

The agreement could take the form of a copyright license or a monetization agreement such as sharing of revenue, an option that is already widely used.

The Commission also wants online sharing platforms to put in place "appropriate and proportionate measures, such as content identification technologies, to ensure the functioning" of the agreements with rightsholders.

The proposal is still being discussed and the final version is expected in late September.

Google says YouTube alone has generated over $2 billion for rightsholders by striking licensing agreements with music labels and publishing societies around the world.

YouTube uses Content ID, which automatically identifies an artist's content, to give rightsholders the choice of whether to leave it up, block it or monetize it through a revenue-sharing deal.

Google says over 98 percent of all YouTube copyright removal claims are done through Content ID and the music industry chooses to monetize 95 percent of its Content ID claims.

But rightsholders say they do not have enough bargaining power and are presented with a "take it or leave it" deal since the online platforms have no obligation to negotiate with them.

The draft paper said its proposals would likely increase revenues for rightsholders, but did not estimate by how much.

Google declined to comment.

The music industry says Content ID does not work well enough and subscription-based services such as Spotify generate more revenue for the industry despite having a smaller user base.

The Commission also wants to give news publishers a new right covering the online use of their content to give them more bargaining power vis-à-vis online players such as Google.

The media industry has often accused Google of making money at its expense by making its content freely available via Google News.